FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Problem 08-40 (LO 08-2) (Algo) [The following information applies to the questions displayed below.] Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Inventory Building Land Total FMV $ 28,000 210,000 322,000 Adjusted Tax Basis $ 14,000 140,000 420,000 $ 560,000 $ 574,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $460,000. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Problem 08-40 Part e (Algo) e. Suppose the corporation assumed a mortgage of $660,000 attached to the building and land. The fair market value of the building is $350,000 and the fair market value of the land is $742,000. The fair market value of the stock remains $460,000. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
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Transcribed Image Text:Problem 08-40 (LO 08-2) (Algo) [The following information applies to the questions displayed below.] Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation's stock. The property transferred to the corporation had the following fair market values and adjusted tax bases: Inventory Building Land Total FMV $ 28,000 210,000 322,000 Adjusted Tax Basis $ 14,000 140,000 420,000 $ 560,000 $ 574,000 The corporation also assumed a mortgage of $100,000 attached to the building and land. The fair market value of the corporation's stock received in the exchange was $460,000. Note: Negative amount should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable. Problem 08-40 Part e (Algo) e. Suppose the corporation assumed a mortgage of $660,000 attached to the building and land. The fair market value of the building is $350,000 and the fair market value of the land is $742,000. The fair market value of the stock remains $460,000. How much, if any, gain or loss does Zhang recognize on the exchange assuming the revised facts?
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